Has the past 60 years of high economic growth been an aberration? Is slow growth the norm?

Having just posted a relatively gloomy blog about US manufacturing, here’s another one –  this time about the global economy, from the McKinsey Global Institute.  It has looked at GDP growth from 1700 onwards.  Up to 1900, it was 1% (despite the impact of the industrial revolution).  Between 1990 and 1950 it was 1.3% (despite the development of mass production).  From 1950 up to 2014 it has been at 3.8%, but current projections for the next fifty years forecast it will fall back to just 2.1%.

The high rate of growth from 1950 was largely a result of two forces – rapid growth in the working population and a significant rise in labour productivity.  MGI forecast that population growth will not be sustained in the future, so any growth in GDP has to be field by productivity gains. So “…achieving the increase in productivity required to revitalize the global economy will force business owners, managers, and workers to innovate by adopting new approaches that improve the way they operate”.  Most of this can be achieved by weaker operators adopting best practice, but one quarter has to be delivered through innovation.  In particular the public sector and healthcare operators have to significantly improve their productivity.

This link takes you to an overview of the report.  From here you can watch a video of an interview with one of its authors, read the Executive Summary, or download the full report.

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